Sunday share tips: Saga, the FTSE 100, Safestay

Shares in Saga are a 'buy' for the Sunday Times' Inside the City column, after a steady but unshowy performance since its initial public offer two years ago. Management plan to shift the business from a plain old insurer that also markets holidays and other services to its over-50s customers, into a broker that makes commission from sales made to third parties, who will offer services under the company's brand but take on more of the risk.

This will require the group to hold less cash - of which £210m of cash and equivalents sat on the balance sheet at the half-year - and return some of this in dividends. A reinsurance deal in March took some risk of the table and analysts predict that alone could result in a bigger year-end dividend. Ahead of results this week, Saga's shares are available on a forward p/e ratio of 14, whereas ratings for brokers are nearer 16.

Questor in the Sunday Telegraph advises selling the FTSE 100 as part of the old stock market maxim of 'sell in May and go away, don't come back till St Leger's day'. One of the main risks is Britain's vote on 23 June on whether to stay or leave the European Union. An out vote could cause economic shockwaves worldwide, according to the IMF. The UK benchmark index is also overvalued on the basis of its p/e ratio, currently on 17 versus its long-term average of 15.

While the old maxim is predicated on brokers and traders heading for the beaches or the hills for the summer, other factors to that will impinge on equity values in 2016 include reports that we are heading towards the late stages of the present cycle, even more so in the US, which retains a big influence over the FTSE 100. Dividend yields are also looking rather top at over 4%, more than double what long-term government bonds are paying!

Buy Safestay shares is the advice from Midas in the Mail on Sunday to adventurous investors. The 2014 flotation is the latest from serial property entrepreneur Larry Lipman, following Safeland, Safestore, Bizspace and Hercules Property Services. Safestay, which has raised £3m and £8m from investors so far, is a provider of holidays hostels currently based on four UK location initially but with plans for fairly rapid expansion to 10 more including a one or two overseas. Trying to distance themselves from the dingy hostels remembered from backpacking trips of yore, Safestay's are based in central city locations, bright, welcoming and learn, with bars, free wifi and comfy beds.

Although there have been some doubts about the poor occupancy levels at new sites, annual results released this months revealed sales more than doubling to £4.0m and its Elephant & Castle site in London with occupancy of 78.6%. A £0.6m loss was due to investment in sites, sales and marketing, and a new website offering a dynamic pricing engine. Lipman has been joined by experienced hotels executives at CEO and FD as this young business attempts to continue momentum in forging a new direction against the existing tide of AirBnB and budget hotels.

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